More Time Being Spent Servicing Debts

People are taking an increasing amount of time to service their debts, it has been revealed.

According to Unbiased, today (March 10th) is Debt Freedom Day - the time of the year when consumers will have earned enough money to allow them to complete interest repayments on the debts accrued on personal loans and credit cards. Starting from the beginning of the year, it was stated that Britons have needed to work for 70 days to generate enough income to service such indebtedness.

Now it was claimed that people should be in a position to take steps to make actual reimbursements on their debts. However, in 2007, the day when people have finished servicing the amount they owe was revealed to stand at February 1st.

Meanwhile, research from the financial advice site revealed that the amount of personal debt has surged by more than ten per cent over the course of last year. During the same period of time the typical level of interest payable on such debts has increased by six per cent.

Commenting on the figures, David Elms, chief executive at Unbiased said: "This year's Debt Freedom Day is a real warning for UK consumers - as it marks the day we start paying off the actual debt levels rather than merely servicing the interest accrued. Compared to last year we spend almost two months longer this year to pay off the interest of our borrowings and this doesn't even take into account mortgage costs."

Unbiased also revealed that personal loan debt in Britain currently stands at 9.8 billion pounds, an increase from the 2.6 billion pounds recorded in 2007. However the amount owed on credit cards has dropped to 54.9 billion pounds, in comparison to 55.6 billion pounds last year.

Mr Elms added that although Debt Freedom Day "is of course a hypothetical point in the financial calendar" it is a date that many consumers should be aware about. He stated: "In the current economic climate it is has never been more important for people to realise just how much it costs to service their debts and to ensure they have adequate funds available to do so."

The executive went on to report that getting monetary guidance from an independent financial adviser could help people get back on their fiscal feet. In getting such help, it was stated that consumers should be able to take stock of their current financial standing and identify areas where they can reduce expenditure and increase the amount of money they can save.

For those looking to get to grips with their finances, applying for a consolidation loan could prove to be of assistance. By taking out such a loan it is possible that consumers could merge monies owed on existing debts into a single low-cost amount. Last month, Rachel Lacey, editor of Moneywise, reported that a debt consolidation loan can be "great" for Britons wanting to improve their money management. However, she stated that after getting a cheap consolidation loan it is crucial that consumers do not go on to borrow more money through overdrafts and credit cards.